When it comes to embracing of the benefits of the Internet, South Africa seems to have been slower in comparison to more sophisticated economies (in Europe, the USA and Australia) where high-speed and reliable Internet connectivity has been available for much longer. RSAWEB’s Commercial Director, Ian Cook, explains how this is a great opportunity for South Africa, as we are only at the beginning of the Internet connectivity use curve and will soon realise many new ways of utilising the Internet.
The power of ubiquitous Internet is still to be realised
History shows us that technological progress can greatly influence the growth agenda of a country, however, the reality of disparate global growth has led to a ‘digital divide’ – with countries that have yet to benefit from a connected economy generally lagging behind those who have. Unless addressed urgently, this divide seems set to limit future growth potential for many countries – South Africa included. It has been difficult for us since our Internet growth potential has been inhibited by very slow data transmission speeds and a lack of reliability in the past. Because of this, we have struggled to grow our economy and embrace the possibilities of “the Internet of things’ as yet.
A knowledge-based economy is reliant on a fast and reliable Internet and it is vital that South Africa grows into this economic profile. We know that the speed of Internet adoption affects business growth in the competitive environments we operate in today. Low-quality connectivity can reduce a company’s agility to adapt to new threats, leaving them vulnerable to the increasingly technology-driven competition. The technology is here now, allowing us to address our historically slower adoption rate with more vision and experience. Wider Internet adoption has the possibility to be a powerful growth and knowledge economy development tool.
Wherever possible, we should enhance and promote a vision for what fast Internet connectivity can do for business and consumers, and make its use widespread. Given the day-to-day pressures that many businesses experience, future-proofing a business will be a hard, but necessary measure.
A knowledge economy’s potential
The service and knowledge industries are by far the largest growth sectors of many economies. As more and more service sector employees can now work from home, many benefits can flow. If properly managed, reducing wasted commuting time will enhance staff productivity and well-being – reduced carbon emissions as commuting density falls, is a worthwhile benefit too. Company office space and service needs have dropped dramatically in many companies globally, resulting in cost reductions with more emphasis being placed on virtual team meetings and connectivity. Technology has allowed physical scale and growth to easily be managed in virtual space!
Educating and promoting deeper Internet commerce to customers is a critical element for growth. A virtuous circle of technology, customer adoption and connectivity can be built. If we take international trends as a guide, we see that trust in the Internet’s ease of use, speed, the range of transactions available and product delivery efficiency will grow over time. But for this to even begin to work, the strategy, intent, leadership, vision and resources to move into this ‘Internet of things’ will need to be put into effect, along with a definite Internet infrastructure strategy.
In the past, strategy largely had to follow existing infrastructure. However, with the impact of the Internet today, its very scale, adaptability, massive depth of already existing applications and uses, makes it possible for new strategies to be developed almost independent of infrastructure. In the future, many companies will no longer need or wish to own physical hardware in order to implement their strategy.
Use the cloud to future-proof your business
In the pre-Internet world, infrastructure was a fixed cost. If you grew and then lost business, your fixed costs could not easily adapt to a smaller scale and bankruptcy was almost inevitable. Variable costs that grow and contract in line with your profitability is critical in avoiding this. For example, putting your servers into the cloud gives you the ability to scale based on customer demands, turning it into a variable cost. Companies no longer need capital to scale.
The reality is that many companies in South Africa are looking at contraction and cost optimisation. Businesses are reacting to decreased sales, increased costs and inflation and it is becoming far harder to achieve growth as the need to drive down costs increases. A shift in mindset towards scalable growth and agile ways of surviving is required. With the ability to drive scale and customer reach, whilst reducing costs by moving to cloud outsourcing, this shift is easier today than ever before. Staff can be moved into different and far more valuable roles as cloud capability allows for solutions that could not be developed in-house. Being able to translate fixed into variable costs will make businesses much more resilient to market changes.
Outsourcing is a major way of shifting from fixed costs to variable ones and the pre-cloud environment made outsourcing difficult to do. Outsourcing core business functions, like payroll, for example, can now be done far quicker and at a lower cost in the cloud – and they can plug into your systems more easily than before. In-house server and staff costs, upgrade paths and maintenance all become variable costs too and data storage, backups, software upgrades plus many other in-house activities can easily be sourced from cloud partner companies. Essentially, deeper Internet capacity and integration will greatly reduce a business’ need to own fixed assets and IT operations can be rented and run in a tenant/client relationship management style.
Whether you are a small company or large business, a move to the cloud ultimately helps you to:
- Simplify your operation
- Focus on core your functionality and competency
- Transfer more operating costs into variable costs
- Outsource back-office functionality as a low-risk step
- Improve/increase your distinctiveness in the marketplace
RSAWEB’s Chief Technology Officer, Ian Cook, has worked all over the world in a diverse range of technology environments for the past 28 years.